Banks reach merger pact

St. Joseph Capital will be acquired by Old National Bancorp.

St. Joseph Capital will be acquired by Old National Bancorp.

October 24, 2006|ED SEMMLER Tribune Staff Writer

MISHAWAKA -- Old National Bancorp has worked out an agreement to acquire St. Joseph Capital Corp. for $75.6 million. The agreement, which was announced Monday, is subject to approval by banking regulators and shareholders of St. Joseph Capital. The deal should be completed in the first quarter, according to bank officials. St. Joseph Capital shareholders will receive $40 for each share they own. The company's stock closed at $28.38 on Friday, but jumped $10.37 after news of the merger to close at $38.75 Monday on the Nasdaq. St. Joseph Capital is the holding company for St. Joseph Capital Bank, which has an office at Edison Lakes in Mishawaka and at RiverWalk Commons in downtown Elkhart. "This is an exciting partnership and opportunity for Old National," Bob Jones, president and chief executive of Old National Bancorp of Evansville, Ind., said in a prepared statement. "St. Joseph has a deeply rooted management team that has a proven and passionate commitment to their clients and community," Jones continued. "St. Joseph's has experienced exceptional growth accompanied by a pristine record of asset quality and shareholder return." The acquisition by Old National is the first for the company since 2000 and the largest by asset size in the company's history. John Rosenthal Sr., chairman, president and chief executive of St. Joseph Capital, said the deal came about after a meeting of bank officials this summer to review the strategic plan. "We looked at our business model and saw three alternatives," said Rosenthal. Because of the expenses related to the financial reporting requirements stemming from the Sarbanes-Oxley Act, the company considered going private, Rosenthal said. Mishawaka-based Quality Dining also cited the increased costs of compliance with Sarbanes-Oxley when it went private in 2005. Rosenthal said the bank also could have remained publicly traded and started adding new products on its own. The third option was to look "for an outstanding partner with the products and services our customers were clamoring for." In the end, St. Joseph Capital selected the last option because it found a partner with "tremendous strengths," Rosenthal said. St. Joseph Capital has almost $500 million in assets and the equivalent of 70 full-time employees. The impact on employees will likely be minimal, though there is a little overlap of personnel, Rosenthal explained. After the merger is completed , Rosenthal will serve as regional chief executive for northern Indiana, Alex Strati Jr. will be president of the Michiana market, and Amy Kuhar Mauro will be chief credit officer for northern Indiana. Rosenthal will be charged with looking for ways to expand the bank through loans, acquisitions or new branch construction in the area north of Indianapolis. St. Joseph Capital, which is about 10 years old, grew by focusing on relationship banking. That focus will continue, including the bank's courier services, said Jones of Old National. In addition, however, it will also be able to offer customers investment services, insurance, trust products and other items. Jones said some personnel from other Old National locations will likely transfer to Michiana to focus on some of the new service areas.